ACA: PHSA Mandates By Plan Type

The Affordable Care Act (ACA) implements its various market reforms and mandates by amending the Public Health Service Act (PHSA). These are often referred to as the PHSA Mandates (Mandates) and they apply directly to insurers and government plans. These mandates were also incorporated by reference into the Employee Retirement and Income Security Act (ERISA) and the Internal Revenue Code (Code) making them applicable to employer-sponsored group health plans, including self-insured plans.

This Geek Out! page provides a summary of those mandates and includes links, where applicable, with more more extensive information.

Plans Subject to the PHSA Mandates

Included Plans

As noted above, via reference to ERISA and the Code, the PHSA Mandates apply to employer sponsored group health plans and health insurance issuers (for example, an insurance company). A group health plan is an employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.

Excluded Plans

The PHSA Mandates were added to the HIPAA portability provisions; therefore, many of the same exceptions apply to the Mandates as apply to HIPAA portability rules. These include (but are not limited to) the following:

• Certain types of benefits, such as disability or accident only coverage;
• Limited scope Benefits, such as limited-scope dental and vision benefits;
• Certain independent, noncoordinated benefits, such as coverage limited to a specific disease;
• Certain supplemental benefits, such as Medicare supplements; and
• Certain Health Flexible Spending Accounts (FSAs).

See the excepted benefits Geek Out! page for additional information.

Please Note: Even if a plan is exempt form the PHSA Mandates, it does not mean that it is exempt from all of the provisions under health care reform.

PHSA MANDATES APPLICABLE TO ALL PLAN TYPES

Grandfathered and Non-grandfathered – Fully-insured and Self-insured

Preexisting Condition Exclusions:  Group health plans may not impose preexisting condition exclusions (i.e., exclude coverage for treatments based on pre-existing health conditions).

Waiting Periods: Group health plans shall not apply any waiting period that exceeds 90 days.

Annual and Lifetime Limits:  Elimination of lifetime and annual limits on essential health benefits.

Cost Sharing:  Plans must implement cost sharing limitations that limit the annual out-of-pocket maximums.  Initially limited to no greater than the limits for high deductible health plans, but subject to an annual adjustment by the government thereafter.

Prohibition on Rescission: All group health plans are prohibited from rescinding plan coverage retroactively, unless coverage is being terminated due to fraud or intentional misrepresentation by a participant.

Dependent Coverage to Age 26:  Group health plans and individual insurance policies providing coverage to dependent children must allow adult children to remain eligible for coverage until the child’s 26th birthday, regardless of full-time student status, marital status, financial dependency, residency, or any other factor other than the relationship to the participant.

Summary of Benefits & Coverage:  Issuers and Plan Sponsors must create a Summary of Benefits & Coverage (“SBC”), intended to enable eligible health plan enrollees to easily understand the available health coverage and determine the best benefit options for themselves and their families.

PHSA MANDATES APPLICABLE ONLY TO:

Non-grandfathered – Fully insured and Self-insured”

Non-discrimination based on health status:  Health insurance issuers may not discriminate against an individual in terms of enrollment premium because of a health status-related factor in relation to the individual or his or her dependent.

Non-discrimination against health care providers: Participants may designate any participating in-network PCP or Pediatrician as their primary care provider. They may also access OB/GYN care without requiring referral, and procure coverage of emergency services without prior authorization as though the ER provider is in-network for true emergencies.

Coverage for participation in clinical trials:  Group health plans must provide coverage (and may not limit) coverage for individuals participating in clinical trials, which applies to all clinical trials that treat cancer or other life-threatening diseases.

Preventive health services: Requires group health plans and health insurance issuers that are not grandfathered health plans to provide a wide array of preventive care items and services with no cost-sharing.

Appeals and external review:  Group health plans must implement new claims and appeal requirements, issue enhanced notices of adverse benefit determinations containing additional disclosures, and adopt an external review process including referral to an Independent Review Organization.

Patient protections:  Group health plans must incorporate provisions to protect certain individual rights, including Choice of Provider and Emergency Room Services.

PHSA MANDATES APPLICABLE ONLY TO:

Non-grandfathered – Insured

Rating limitations: Health insurance issuers in the small group market must limit rating factors to coverage (individual vs. family), rating area (as established by each state), age, and tobacco use and may not vary premium rates beyond specified ranges.

Guaranteed availability:  Each health insurance issuer that offers health insurance coverage in the individual or group market in a State must accept every employer and individual in the State that applies for such coverage.

Guaranteed renewability:  A health insurance issuer that offers health insurance coverage in the individual or group market must renew or continue in force such coverage at the option of the plan sponsor or individual regardless of health status of the individual or group.

Non-discrimination in favor highly compensated persons: Fully-Insured Plans must comply with IRC Section 105(h) Nondiscrimination Rules that previously only applied to self-insured plans, including rules that prohibit discrimination in favor of highly- compensated individuals in relation to eligibility to participate and benefits provided.

Essential health benefits:  Group health plans shall ensure that coverage offered to small groups includes the Essential Health Benefits package, which must be equal in scope to benefits covered by a typical employer plan as determined by each State and must include items and services in ten general categories.

PHSA MANDATES APPLICABLE ONLY TO:

Grandfathered and Non-grandfathered – Insured

Medical loss ratio:  Requires health insurers to spend specified percentages of the premium they receive on health care benefits. Insurers must provide notices by August 1 if any rebates are due to employers as a result of exceeding the specified percentages from the previous year. Employers must also follow certain rules in distributing any rebates they receive.